UK Markets closed

Major UK firms 'named and shamed' for failing to pay minimum wage

File photo dated 26/01/18 of UK five pound, ten pound, twenty pound and fifty pound notes with one pound coins. Three in four people think Covid-19 will continue to affect their use of cash going into 2021, a survey has found.
Firms were named and shamed for not paying the minimum wage. Photo: PA

More than 100 companies have been fined and called out by the UK government for failing to pay their workers the legal minimum wage.

Britain’s biggest supermarket Tesco (TSCO.L), pharmacy chain Superdrug, restaurant chain Pizza Hut, dairy brand Müller, wholesaler Costco, and rugby league club Wigan Warriors are among the 139 organisations singled out.

Collectively the employers were found by HMRC to have under-paid more than 95,000 staff by £6.7m ($9.1m) between September 2016 and July 2018.

It is the first time in two years employers have been named in a bid to deter others.

“Naming and shaming” had been paused and a review carried out into its effectiveness last year. The government decided to highlight breaches more frequently, but only spotlighted arrears of more than £500 in recognition that many breaches were unintended administrative errors for small sums.

WATCH: What is the Job Support Scheme and how has it changed?

READ MORE: UK government ‘in the dark’ on exploitation at work

Business minister Paul Scully said: “Paying the minimum wage is not optional, it is the law. It is never acceptable for any employer to short-change their workers, but it is especially disappointing to see huge household names who absolutely should know better on this list.

“This should serve as a wake-up call to named employers and a reminder to everyone of the importance of paying workers what they are legally entitled to.

“Make no mistake, those who fail to follow minimum wage rules will be caught out and made to pay up.”

The government warned firms risk financial penalties of up to 200% of the arrears, capped at £10,000 per worker. All of the named companies have paid back their workers and were forced to pay financial penalties.

Tesco was found to have failed to pay the largest sum and left the largest number of workers out of pocket. It left more than 78,000 workers below the wage floor, with total arrears of almost £5.1m.

The company’s inclusion at the top of the government’s list comes in spite of the supermarket owning up and paying out for breaches it identified in 2017.

Tesco apologised and said it would pay back almost £10m to current and former workers at the time. When a new payroll system came in, the company noted calculation errors had been made over deductions for voluntary salary sacrifice schemes.

Tesco said it was surprised and disappointed to have been included in the list on Thursday when contacted by Yahoo Finance UK.

A Tesco spokesperson said: “Back in 2017 we identified a technical issue that meant some colleagues’ pay inadvertently fell below the national minimum wage. We are very sorry this happened and proactively reported the issue to HMRC at the time. All our colleagues were reimbursed in full and we immediately changed our policies to prevent this happening again. In most cases the reimbursement was £10 or less. Once we uncovered this mistake, we took a proactive, transparent and cooperative approach with HMRC.

“We are therefore extremely disappointed and surprised to have been included in this list as none of the examples shared by BEIS relate to Tesco, and it was Tesco that self-reported this issue to HMRC in the first instance. We take our obligations to our colleagues very seriously and all colleagues were reimbursed in full in 2017.”

The other companies named on Thursday included:

  • Pizza Hut was found to have under-paid 10,980 staff by almost £846,000.

  • Superdrug was found to have underpaid 2,222 workers more than £15,000 in total.

  • Müller UK & Ireland failed to pay £10,166 to 54 workers, according to HMRC.

  • Costco Wholesale UK Limited was accused of leaving 58 workers short of £3,748 between them.

  • Wigan Rugby League Club was singled out for a breach involving just one worker, who was found to have been left £4,559 out of pocket.

Wigan Warriors Rugby League Club said there was a clerical error in 2017, which it had rectified and also conducted a full investigation.

“During the course of HMRC’s audit, one administrative employee was found to not have been paid in accordance with NMW regulations for a short period during 2017. This had been caused by a clerical oversight at the time the individual commenced employment with the company,” club spokesperson Alastair Hancock told Yahoo Finance UK.

He said the oversight was an isolated incident and immediately corrected, including making up full pay in line with minimum wage regulation for the period in question. “Systems and procedures have since been updated to ensure that such an oversight would not occur again in the future,” Hancock said.

The government, meanwhile, said one of the main reasons for breaches was low-paid workers paying for work costs such as uniforms, parking or training. Others should have seen pay rises on their birthdays as rates are higher in different age brackets for young people.

A Pizza Hut Restaurants spokesperson said: “Several years ago, along with many other businesses in the sector, HMRC made us aware of an error relating to a historical uniform policy. In 2018 we completed a wage adjustment for current and former employees working closely with the HMRC to understand who was eligible.

“There was never any intent to underpay our employees, we are advocates of the principles that underpin minimum wage and we are confident that the necessary processes have been fixed to ensure that this will not happen again.”

READ MORE: Minimum wage hike for two million workers as public sector pay freeze confirmed

Superdrug also referred to the historical error. A spokesperson said: “This refers to a historical payment of £15,228.57 in relation to uniform which was paid in full to 2,222 employees in 2018. As soon as we were notified, we swiftly reimbursed both current employees and leavers, working with HMRC to ensure they were fully compensated. We immediately changed our uniform policy to ensure the issue does not happen again.”

WATCH: UK jobs fall by most in over four years

Müller UK & Ireland also said it too had rectified the error quickly. “This was a technical infringement of HMRC guidelines which was quickly rectified in 2018 to the satisfaction of all parties. Most importantly, no employee received less than the national minimum wage equivalent or was disadvantaged in any way,” a spokesperson said.

Research earlier this year suggested hundreds of thousands of people were being paid under the minimum wage in Britain.

The government’s jobs tsar Matthew Taylor told Yahoo Finance UK at the time the breaches included failures to up-rate wages immediately when rates increase each year.

“People need to be aware that’s not 11,000 bosses rubbing their hands going, ‘How can I not pay poor people the minimum wage’.”